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The moral hazard incentives of the bank safety net predict that distressed banks take on more risk and higher leverage … include financial crises and are subject to different regulatory regimes (1985–1994, 2005–2014). We find that distressed banks …
Persistent link: https://www.econbiz.de/10012216705
We evaluate the effects of the 2009 Home Affordable Modification Program (HAMP) that provided intermediaries with sizeable financial incentives to renegotiate mortgages. HAMP increased intensity of renegotiations and prevented substantial number of foreclosures but reached just one-third of its...
Persistent link: https://www.econbiz.de/10009697769
We study a controlled experiment in which a bank's loan officers were incentivized based on originated loan volume to encourage prospecting for new business. While treated loan officers did attract new applications, both extensive and intensive margins of loan origination expanded ( 31% new...
Persistent link: https://www.econbiz.de/10009625941
When borrowers are delinquent, senior debtholders prefer liquidation whereas junior debtholders prefer to maintain their option value by delaying resolution or modifying the loan. In the mortgage market, a conflict of interest (“holdup”) arises when servicers of securitized senior liens are...
Persistent link: https://www.econbiz.de/10010353293
risky banks, thereby creating market discipline. An alternative perspective is that market discipline is limited (e.g., due … to deposit insurance and/or enhanced capital regulation) and that internal demand for funding by banks determines rates … capitalization levels. In contrast, banks' loan growth has a causal effect on deposit rates: e.g., branches' deposit rates are …
Persistent link: https://www.econbiz.de/10011772352